GPB Capital Holdings Accused of Financial Misconduct by Business Partner and Investors are Filing FINRA Arbitration Claims
One of GPB Capital Holdings‘ business partners is suing the issuer of high-risk private placements, claiming the firm engaged in “serious financial misconduct” and tried to push him out after the partner complained to the Securities and Exchange Commission (SEC), according to a recent report. Since 2013, GPB has raised $1.8 billion from investors through registered representatives at independent Financial Industry Regulatory Authority (FINRA) broker-dealers. GPB’s investment strategy is to buy auto dealerships and waste management businesses with the intent of generating high, single digit returns for clients. Meanwhile, brokers pocketed commissions of 7% or more.
In a complaint filed in Norfolk Superior Court in Massachusetts on July 19, David Rosenberg, chief executive of Prime Automotive Group, accused GPB Capital Holdings of running a Ponzi-like scheme, in which it used money from investors to prop up the performance of auto dealerships it owns, as well as to finance payments to other investors, according to the Boston Globe.
GPB Capital was primarily supposed to be buying auto dealerships and waste-management businesses that were represented to provide attractive yields for the various firms’ clients. GPB has told the broker-dealers that marketed its private placements that it is getting its financial house in order and completing an audit of its various funds. However, the more information that come out, from the various state and federal investigations, the firm’s operations appear to have the makings of a giant ponzi scheme. Time will tell.
In the wake of the accusations against GPB Capital, individual investors are starting to file arbitration claims against the broker-dealers that sold private placements packaged by GPB Capital, which raised $1.5 billion from investors and is under investigation by state and federal authorities. If you have invested in a GPB related product, please contact the securities negligence and fraud attorneys at Colling Gilbert Wright for a complimentary case evaluation.